Precision Optics Corporation, Inc. ((POCI)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Precision Optics Corporation, Inc. recently held its Q1 fiscal 2026 earnings call, which highlighted significant revenue growth and strategic expansion. The company reported a substantial increase in revenue and new development agreements, reflecting strong market demand. However, challenges with gross margins and a net loss slightly tempered the positive momentum. Despite these hurdles, the company expressed optimism about future profitability and growth.
Record Quarterly Revenue
Precision Optics announced a record quarterly revenue of $6.7 million for Q1 fiscal 2026, marking a 46% increase compared to the same quarter last year, after adjusting for tariff reimbursements. This impressive growth underscores the company’s expanding market presence and successful execution of its strategic initiatives.
Aerospace Program Growth
The aerospace program was a standout performer, with revenue reaching $2.5 million, net of tariffs. This represents an extraordinary increase of over 800% compared to the previous year, supported by a robust backlog of over $9 million, indicating sustained demand and future revenue potential.
Cystoscope Program Expansion
Revenue from the single-use cystoscope program saw significant growth, reaching $1.5 million net of tariff reimbursements. This marks an 85% increase from the previous quarter and a 180% year-over-year increase, highlighting the program’s rapid expansion and growing market acceptance.
New Product Development Agreements
Precision Optics signed two major development agreements for augmented reality systems for defense and a high-resolution borescope for jet engine inspection, totaling approximately $1.4 million. These agreements are expected to bolster the company’s position in the aerospace and defense sectors.
Ross Optical Division Growth
The Ross Optical division reported a 10% quarter-over-quarter revenue increase, suggesting a potential recovery in the optical components market. This growth is a positive indicator for the division’s future performance.
Gross Margin Challenges
The company faced challenges with gross margins, which decreased to 14.4% from 26.6% in the same quarter last year. This decline was attributed to the aggressive ramp-up of production operations and the under-absorption of engineering resources.
Net Loss
Precision Optics reported a net loss of $1.6 million for the quarter, compared to $1.3 million in the year-ago first quarter. This reflects the financial pressures faced by the company amidst its rapid expansion efforts.
Delayed Defense Reorder
A delay in receiving a reorder from a large defense customer impacted the Micro-optics division’s revenue, highlighting the challenges in the defense sector and the need for timely order fulfillment.
Forward-Looking Guidance
Looking ahead, Precision Optics remains optimistic about fiscal year 2026, projecting revenue over $25 million and approximately $0.5 million in positive adjusted EBITDA. The company anticipates improvements in gross margins as production efficiencies are realized and continues to expand its presence in the aerospace and defense sectors through new development programs.
In conclusion, Precision Optics Corporation’s Q1 fiscal 2026 earnings call reflected a positive sentiment with record revenue growth and strategic expansions. Despite facing challenges with gross margins and a net loss, the company remains confident in its future profitability and growth prospects, driven by strong demand in its key programs and new development agreements.